As part of the State’s interest in protecting the integrity of the family, Article 155 of the Family Code grants the husband and wife, or an unmarried head of the family, the right to claim the family home as exempt from execution. Under Article 152 of the Family Code, a family home, constituted jointly by the husband and the wife or by an unmarried head of a family, is the dwelling house where they and their family reside, and the land on which it is situated. It is a real right that is gratuitous, inalienable, and free from attachment [Taneo, Jr. v. Court of Appeals, G.R. No. 108532 (09 March 1999)].
In Sia v. Tan, G.R. No. 220695 (05 January 2022), the Supreme Court underscored the importance of exempting the family home from execution, describing the same as a sacred symbol of family love and a repository for cherished memories:
“The family home is a sacred symbol of family love and is the repository of cherished memories that last during one’s lifetime. It is the dwelling house where the husband and wife, or an unmarried head of a family reside, including the land on which it is situated. It is constituted jointly by the husband and the wife or by an unmarried head of a family. It is the sanctuary of that union which the law declares and protects as a sacred institution; and likewise a shelter for the fruits of that union. It is where both can seek refuge and strengthen the tie that binds them together and which ultimately forms the moral fabric of our nation.”
Indeed, as provided by law, the family home cannot be seized by creditors except in certain cases, such as those stated in Article 155 of the Family Code:
“Art. 155. The family home shall be exempt from execution, forced sale or attachment except:
- For nonpayment of taxes;
- For debts incurred prior to the constitution of the family home;
- For debts secured by mortgages on the premises before or after such constitution; and
- For debts due to laborers, mechanics, architects, builders, materialmen and others who have rendered service or furnished material for the construction of the building.”
To claim the right to exempt the family home from execution, it must be alleged and proven; otherwise, the property may be seized. As held by the Supreme Court in Cordova v. Ty, G.R. No. 246255 (03 February 2021):
“The claim that a property is a family home is not a magic wand that will freeze the court’s hand and forestall the execution of a final and executory ruling. The Court, in Salazar v. Felias, held that the claim for exemption must be set up and proved, whether the claim for exemption of the family home is premised under the Civil Code or the Family Code.”
Thus, while under Article 153 of the Family Code, the family home is deemed constituted on a house and lot from the time it is occupied as a family residence, the following requisites must be established: (a) it must be the house where he and his family actually reside and the lot on which it is situated; (b) the family home must be part of the properties of the absolute community or the conjugal partnership, or of the exclusive properties of either spouse with the latter’s consent, or on the property of the unmarried head of the family; and (c) the actual value of the family home shall not exceed, at the time of its constitution, the amount of PhP300,000.00 in urban areas and PhP200,000.00 in rural areas (Cordova v. Ty, supra).
Based on the foregoing, even if the property is where the family actually resides and the lot on which it is situated is part of the properties of one who is entitled to the real right of a family home, its actual value is a significant consideration for its classification as such. At present, Article 157 of the Family Code limits the value of the family home to PhP300,000.00 in urban areas and PhP200,000.00 in rural areas despite the accelerated rise of residential property values since the effectivity of the Family Code in 1988. Consequently, persons who wish to avail of the exemption of their family homes from execution are faced with the issue of their properties exceeding the value limits set almost four decades ago.
Recently released data from the Bangko Sentral ng Pilipinas show that, based on the residential real estate prices index (RREPI), the average appraised value of new housing units in the country stood at PhP86,417.00 per square meter (sq.m.) in Q3 2024, while the average in the National Capital Region (NCR) was at PhP135,076.00 per sq.m. [Residential Real Estate Prices Decline in Q3 2024, Bangko Sentral ng Pilipinas (27 December 2024), at https://www.bsp.gov.ph/SitePages/MediaAndResearch/MediaDisp.aspx?ItemId=738]. Using these figures, only a residential property that is a maximum of 2.2 sq.m. would be considered as a family home in NCR.
Another factor to consider is the enactment of the Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) in 2017, which amended Section 86(A) of the National Internal Revenue Code (NIRC) on the allowable deductions to the value of the gross estate regarding the family home:
“The Family Home. — An amount equivalent to the current fair market value of the decedent’s family home: Provided, however, That if the said current fair market value exceeds Ten million pesos (P10,000,000), the excess shall be subject to estate tax.”
Indeed, the limits for the exemption from execution under the Family Code and the exemption under TRAIN for purposes of estate tax are vastly different.
Recognizing the problem that the maximum value of the family home has not been updated in almost four (4) decades, two (2) bills were filed during the 19th Congress which proposed to amend the value of the family home to PhP750,000.00 – PhP2,000,000.00 in rural areas and PhP1,000,000.00 – PhP5,000,000.00 in urban areas at the time of its constitution (H.B. Nos. 2691 and 7441, 19th Congress, 1st Session). As these values are still quite low, we may still see more exemptions made under the TRAIN Law for estate tax deductions compared to family home exemptions under the Family Code, even as amended.